• The Edge Malaysia cited Malaysia’s Minister of Primary Industries Teresa Kok as saying that the EU’s evaluation of palm oil has not been fair and just. The minister was responding to the Norwegian Parliament’s vote in early December 2018 that will make the country the first in the world to ban palm biodiesel from year 2020F onwards. In our view, Norway’s ban on palm biodiesel is immaterial as Norway only purchased 569 tonnes of palm products from Malaysia in 2017. Malaysia’s exports amounted to 16.6mil tonnes in 2017. What is more significant is that Norway’s move would be supportive of the EU’s proposed ban on palm biodiesel from year 2030F onwards.

• Reuters reported that commodity traders are in the dark because of the partial US government shutdown as they are unable to see daily and weekly export reports. The reports provide traders with insights on whether China is buying US soybeans. Traders have been anxiously waiting for proof from the USDA that China is ramping up purchases of grains and soybeans from US farmers, who are preparing their spring planting and trying to secure financing for seeds and fertiliser. Also, the suspension of the reports is giving large grain companies an unfair advantage in trading soybeans as they are directly involved in the export trade.

• The South China Morning Post reported on how the price of sugar could swing Indonesia’s general elections. Keeping sugar prices low is critical for voter support. However at the same time, Indonesia is also home to sugar farmers, who want to sell their products at high prices. Indonesia’s sugar imports have doubled in the past 10 years. In 2017, less than half of the sugar consumed in Indonesia was produced domestically. Thailand supplied 94% of Indonesia’s sugar imports. The decision to allow sugar imports has allowed sugar price in Indonesia to stabilise at US$1.00/kg. Although the government has set a minimum price for sugar to ensure security for domestic farmers, the farmers have been demanding for an increase in the minimum price.

• Reuters reported that Uralkali will redirect its sales from China and India to Africa as the prices of potash in China and India are too low. Uralkali, which is one of the world’s largest producers of potash, usually signs large supply contracts with China and India each year. However last year, Uralkali only agreed to sell “minor volumes” of potash to China for US$290/tonne. Uralkali said that a price below US$300/tonne is unreasonable given the robust global trends in potash prices. Uralkali added that a price of more than US$310/tonne is more appropriate for China and India.

Source: AmInvest Research - 7 Jan 2019